Lycopodium Limited (ASX:LYL) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to this year's statutory forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Investor sentiment seems to be improving too, with the share price up 8.2% to AU$5.25 over the past 7 days. Whether the upgrade is enough to drive the stock price higher is yet to be seen, however.

Following the upgrade, the most recent consensus for Lycopodium from its solitary analyst is for revenues of AU$250m in 2022 which, if met, would be a substantial 57% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 36% to AU$0.49. Prior to this update, the analyst had been forecasting revenues of AU$212m and earnings per share (EPS) of AU$0.39 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Lycopodium  earnings-and-revenue-growth

With these upgrades, we're not surprised to see that the analyst has lifted their price target 8.7% to AU$6.85 per share.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Lycopodium's rate of growth is expected to accelerate meaningfully, with the forecast 57% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 0.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Lycopodium is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, the analyst also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Lycopodium.



Better yet, our automated discounted cash flow calculation (DCF) suggests Lycopodium could be moderately undervalued. You can learn more about our valuation methodology  on our platform here.

Of course, seeing company management  invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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